WILL FACEBOOK’S SEARCH FEATURE MAKE A DENT?

Last week, Facebook announced a new feature: a more sophisticated social search box. The market yawned, sending Facebook shares 6 percent lower.

The social networking site saw a 50 percent increase in its market cap in the two months before the announcement. Was it another “buy the rumor, sell the news” event or a sign that the market simply needs more time to digest the news and figure out what it means for Google, LinkedIn, Yelp and Facebook itself?

The idea of social search is what originally created the pre-IPO hype behind Facebook last year. The potential was perceived to be enormous — and for a good reason.

When people search on Google or Amazon, they already have an intention to consume. We type in whatever product or service we are looking for. Then, we usually read the reviews from people we don’t know or just click on the first link that offers an answer. Adding customized social data to the picture would completely change our decision-making experience. Imagine looking for a new TV set and being able to see what your friends or friends of friends have to say on the subject. You would definitely trust more people you know.

Facebook has two paths — either sell all the social data it has accumulated to companies like Google and Amazon or go head-to-head with them by creating its own search function. It chose the latter.

While Facebook is still very far from challenging Google in the search field, it has a potential to steal some of its milkshake down the road. The stock market is paying attention, and maybe this is why Google shares were under pressure last week.

Using Facebook search to find new potential recruits does not sound serious, either. Most people have strict boundaries between their professional and personal life. LinkedIn has carved its niche, and it has little to worry here. Maybe this is why its stock continues to hover near its all-time high.

The idea behind social search is sound. It remains to be seen if execution will be good enough to cause a serious dent in the distribution of advertising dollars. One thing is paramount. Mark Zuckerberg has quickly figured out what Wall Street wants to hear from him — that Facebook will invest heavily in search and mobile solutions. His team has delivered exactly that.

The new search feature is likely to increase user engagement on Facebook. More page views and more time spent on the site equal more advertising dollars. Nothing would speak louder than earnings growth.